3. A firm has the production function y 5Z1 + Z2- Input prices are w,-9 and...
2. A firm has the production function y - z1+ 2z2 Input prices are w 2 and w2 3. a) What is the equation of the OEP? b) Is this production function homothethic?
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Problems 1 a) A firm has the production function y = 22212 and faces input prices W1 and w2. Derive the conditional input demand functions for both inputs. b) If W, = $5 and W2 = $10, what is the minimum cost of producing 27 units of output?
3. A firm's production function is given by y z1214. Input prices are wi and w2 Input 2 is fixed at 256. a) Derive the firm's variable cost function. b) Ifw1 8 and w2 5, what is the least cost of producing 40 units of output? c) At these prices and output, what is the marginal cost?
TUTORIAL2 Chapter 7 Part 1 Key Concepts and Equations: Production Isoquant: shows all combinations of input quantities that yield the same level of output. Higher isoquant: higher level of output Marginal Rate of Technical Substitution: MRTS is the slope of the isoquant at any input combination. It tells us the rate at which we must increase the qty of input 2 per unit decrease in qty of input 1. MRTS diminishes as we move down the isoquant from left to...
TUTORIAL2 Chapter 7 Part 1 Key Concepts and Equations: Production Isoquant: shows all combinations of input quantities that yield the same level of output. Higher isoquant: higher level of output Marginal Rate of Technical Substitution: MRTS is the slope of the isoquant at any input combination. It tells us the rate at which we must increase the qty of input 2 per unit decrease in qty of input 1. MRTS diminishes as we move down the isoquant from left to...
1. A firm has the production function y-Z1Z2 and faces input prices W1 6 and w2- a) What is the equation of the OEP? b) Is this production function homothetic?
9. Suppose the firm's production function is given by f(K,L) = min (Kº,L"} (a) For what values of a will the firm exhibit decreasing returns to scale? Constant returns to scale? Increasing returns to scale? (b) Derive the long-run cost function and the optimal input choices. (c) Suppose the capital is fixed at K = 10,000 and a = 1. Assuming that the firm wants to produce less than 100 units, derive 10. Consider the production function: f(K,L)=KLI. Let w...
7. A firm has the production function Q=LK. The firm initially faces input prices w = $1 and r = $1 and is required to produce Q=100 units. Later the price of labor w goes up to $4. Find the optimal input combinations for each set of prices and use these to calculate the firm's price elasticity of demand for labor over this range of prices.
9. Suppose the firm's production function is given by f(K,L) min (K",L" (a) For what values of a will the firm exhibit decreasing returns to scale? Constant returns to scale? Increasing returns to scale? (b) Derive the long-run cost function and the optimal input choices. (c) Suppose the capital is fixed at R = 10,000 and a =. Assuming that the firm wants to produce less than 100 units, derive 10. Consider the production function: f(K, L) = KLi. Let...
A firm has the production function y= f(x1,x2)= 0.25x11/2 x21/2 . Input prices are w1=$4 and w2= $16 a) Use the technical rate of substitution, the input price rate, and the production function to compute the conditionial input demand fucntion x1(y) and x2(y). b) Compute the firm's long run cost function c(y).